If building big brands is so valuable why aren’t there more success stories? My experience is the pay-off can be huge but there are obstacles that must be overcome.

Big companies have the resources, however middle managers are more often empowered to “say no” than yes.

Timing Is Everything

The only reason for small companies to exist is to think differently and act differently. My advice to big brand companies is take your smaller competitors very seriously and constantly track small companies’ brand strategies.

Disruption Is Almost Always Lead By Product Innovation

For example, Coca-Cola Co. and PepsiCo should take SodaStream seriously as a real game-changer. How did Folgers, at one time the leading coffee brand lose the retail coffee service market to Starbucks?

In 1994 I was asked by Kodak to advise how they should think about their digital future? My advice was, “Their future would not be about picture taking, but picture making”. Kodak at the time had a $20 billion market cap. They could have acquired both Adobe and LexMark together for less than $5 billion. The market cap of Adobe and LexMark today is much higher than $20 billion. In those days, Kodak was known for recruiting the best chemists from the best technical universities. But culturally Kodak was hermetically sealed in Rochester, New York which was a long way from the disruptive risk taking world of Silicon Valley.

Perception Leads Reality

When I was appointed marketing VP of Pepsi-Cola Co. we were way outsold by Coca-Cola. 8 years later, brand Pepsi had passed brand Coke as the largest selling packaged goods product in the USA as measured by AC Nielsen. How did we do it?

We targeted a then new group, “Baby Boomers”, who had a lot of discretionary money to spend. They were interested in high energy activities like riding dirt bikes, surfing, and hiking. Coincidentally, it was the early days in the growth of larger screen color TVs replacing small screen B&W television. Our advertising agency BBDO went to the best motion picture directors in Hollywood with the request to film for us “60 second movies” that focused on appealing life style experiences. Pepsi was just a signature in these TV commercials, not the primary purpose of this campaign. At the time, Coca-Cola Co. advertising was totally focused on the product with a campaign theme, “Coke, its the Real Thing”. We named our brand campaign, “Pepsi Generation” — the first lifestyle advertising which we called “experience marketing”. Michael Jackson helped us drive the brand message here.

A few years later we introduced another “experience marketing” campaign called “Pepsi Challenge” with the goal of capturing the surprise of life long Coke drinkers when they discovered they chose Pepsi over Coke in a blind taste test.

As a result, I was the first big brand marketer to come to Silicon Valley. In 1982, personal computers were being sold on their technology features. Steve Jobs had a different idea; he believed the Mac (still 2 years away from being fully developed) would be the first easy-to-use personal information appliance. Steve referred to the Mac as a bicycle-for-the-mind and he fell in love with “experience marketing”. You may remember our Super Bowl TV commercial that Chiat-Day created for us using the same brand creative principles we had previously had so much success with at PepsiCo. In fact, that first introductory Mac advertising never even showed the computer or ever mentioned anything about the technology. We had just one line of copy, “On January 24 Apple will introduce Macintosh and 1984 won’t be like 1984” (a reference to George Orwell’s mind control police).

I’ve been asked why Pepsi and Apple consistently had such good creative? The answer is quite simple:

The best clients always get the best brand advertising. Microsoft spends more in advertising than Apple. Samsung has been spending almost 10 times more than Apple. But Apple advertising consistently stands out and is remembered. It helps of course that users’ experience with Apple products always lives up to, or even exceeds expectations.

Contributed to Branding Strategy Insider by: John Sculley, Former CEO of Pepsi-Cola, Former CEO of Apple, marketing innovator and thought leader.

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1 Comment

John Sculley here is conflating — if not confusing — creative destruction with disruption. Creative destruction is a paradigm shift wrought by a monsoon of new technology. (To whatever degree pre-existing industries are strong and flexible, this is to their benefit, too. The drastic shrinking of the candle market brought about by the pervasive distribution of kerosene was to Procter and Gamble’s
ultimate advantage.)

Creative destruction changes externals, but not the individual’s psyche. Disruption changes the process of thought and even state of being. In the aftermath of a storm of creative destruction, a product still is sold to the customer. With disruption (in either form) the customer is sold to a product.

Yes, Kodak should have understood that their real business was image production, not silver halide laden plastic film. Even so, the needs of the consumer did not change. New grandparents, major newspapers, police photographers, insurance investigators, medical researchers, . . . wanted and continue to want pictures produced quickly and efficiently; digital cameras better serve that need. The many users of WordPerfect, DBase and Lotus 1-2-3 on an IBM XT already were well aware that a personal computer basically had become a necessity. The Mac lowered the learning curve and took the chore out of the use of a computer. Apple did not change the what and the why of computer ownership; that had to wait for the rise of the Internet. As Mr. Sculley points out, Pepsi’s marketing used — but did not cause — a demographic shift. A glass jaw in the strategy of Coca Cola (past experience: old friends, good memories, nostalgia and tradition) left it open to a knockout by Pepsi Generation promotion.

Disruption really refers to two very different things: cognitive dissonance and dissociation / automaticity. Cognitive dissonance affects the schemas. Dissociation / automaticity sculpts identity and habit through memory. An example of disruption is Procter and Gamble’s soap products as candle sales began to contract. An initially rather rough-hewn 19th century USA had to be taught personal grooming in order to be transformed into the great washed.

The risk of ossification and then fossilization for large firms is something that I completely agree with. Procter and Gamble now faces a significant challenge from Green products.

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